Which Debts to pay

enthusiasticsaver

Do you have an emergency savings funds?

Like others I recommend paying off the highest charging interest rates first (usually overdrafts, store cards, catalogues and credit cards) then tackle loans.

You have a lot of cards and I would not use them in future but live within your monthly income and if you have an emergency fund you will not be tempted to use a card if your house or car needed repairing or any other emergency.

Once you have cleared as much as you can look into moving the rest on to 0% and make a promise to yourself to only use one credit card in the future. Unfortunately they can be too tempting and just delays the budgeting you need to do to keep financially solvent.

New_Guy_2016

No I don't have an emergency savings fund which I know is not ideal.

My plan is to cut them up as really I have been using them for none necessity stuff which I can do without as and you say it is too tempting to use a credit card which has some money on. So for me these are the worst debts and need to remove the temptation hence pay off and close accounts down. I am still left with 2 CC and a catalogue card which I have cut up the cards already but need to pay them off as quick as possible. If I could transfer thee to 0% options that would be brilliant as can pay off quicker but my view is my credit rating would not allow me to do this straight away as would take a few months before my credit file updated I had paid a lot of my debts off

enthusiasticsaver

I am a little unclear about your soa. Is the monthly savings figure the amount you would have free to snowball should you allocate lump sum as indicated?

enthusiasticsaver

Aren't both the vanquis credit cards high interest? I always thought they charged high interest and you have selected one to pay off but not the other. I agree that getting rid of a lot of the cards will give you a psychological boost. Congrats on trying to address this now.

New_Guy_2016

In summary I currently have between £5-600 to put to paying off debts in the snowball effect. But whatever I save from paying of the above dates will add to this so potentially around 1K I could plough into other debts.

Other option is to put some of that into savings for at least some emergency money if needed but do not want to start saving big when I could use that money to get rid of these debts.

New_Guy_2016

Maybe but the above was just a rough guide I did on what to pay off so could potentially change it around

fatbelly

Bogalot wrote: »

You pay the highest interest debts first. There is no logic to paying off small debts if you're left with amounts at higher rates.

This is correct - you need to check the interest rates as the credit cards (even though they are sub-prime) are not likely to be as high interest as store cards and catalogues (and possibly DFS)

New_Guy_2016

I do agree however the reason for not considering say the DFS is it is a fixed term loan so will end so takes the responsibility away from me for making sure I keep paying it off as I am legally obliged to and cannot increase the debt. Whereas with the Credit Cards it is my responsibility to pay it every month and stop myself from spending the available.

enthusiasticsaver

I understand your logic on wanting to clear the credit cards before the fixed term debts but still think it worthwhile for you to get the actual interest rates on eAch debt before making a final decision.

FatVonD

If you are hoping to move everything to 0% then bear in mind that once you clear a card (especially if you have never defaulted) you are likely to be offered a 0% deal so don't close the first ones you pay off as you can then transfer some of the others over (and then close those ones instead or repeat until it's all on 0%.)

With this in mind you need to think about which CCs are all part of the same 'group' as some won't let you transfer a balance from another of their own cards so maybe bear this in mind also when you are deciding which ones to pay off first and leave yourself with a broad mix.